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Energy Prices and Real Economic Activity in Canada: A Multi-Sector Dynamic General Equilibrium Analysis

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  • Yazid Dissou

    (Department of Economics, University of Ottawa)

Abstract

As a net exporter of oil, the recent upward trend in the world prices of energy products represents both an opportunity and a challenge for Canada. This study investigates the aggregate and sectoral effects of a sustained increase in these prices on the Canadian economy using a multi-sector forward-looking dynamic general equilibrium model. Counterfactual simulation results suggest that these price shocks would be beneficial to the Canadian economy on an aggregate basis, as real GDP would increase during most periods and households would increase their consumption profile during all periods and would thereby improve their well being. Nevertheless, the price increases would also shift resources toward export booming sectors and would lead to an appreciation of the real exchange rate that would not be beneficial to traditional manufacturing export industries.

Suggested Citation

  • Yazid Dissou, 2007. "Energy Prices and Real Economic Activity in Canada: A Multi-Sector Dynamic General Equilibrium Analysis," Working Papers 0707E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:0707e
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    File URL: http://sciencessociales.uottawa.ca/economics/sites/socialsciences.uottawa.ca.economics/files/0707E.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Energy prices; commodity prices; aggregate and sectoral impacts; dynamic general equilibrium modeling; Canada;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-

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